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In: Accounting

ABC Company prepares monthly operating and financial budgets. Estimates of sales in units are made for...

ABC Company prepares monthly operating and financial budgets. Estimates of sales in units are made for each month. Production is scheduled at a level high enough to take care of current needs and to carry into each month one-half (1/2) of the next month’s unit sales. Direct materials, direct labour, and variable manufacturing overhead are estimated at $12, $6, and $4 per unit, respectively. Total fixed manufacturing overhead is budgeted at $480,000 per month. Sales for April, May, June, and July 2009 are estimated at 100,000, 120,000, 160,000, and 120,000 units. The inventory at 2019 April 1, consists of 50,000 units with a cost of $28.80 per unit.

Prepare a schedule showing the budgeted production in units for April, May, and June 2019.

Solutions

Expert Solution

April May June July
Sales unit 100,000 120,000 160,000 120,000
Ending inventory of finished goods 120,000x 1/2 = 60,000 160,000 x 1/2 = 80,000 120,000 x 1/2 = 60,000
Total finished goods inventory needed                                              160,000                       200,000                          220,000                                    -  
Beginning inventory of finished goods -50,000 -60,000 -80,000
Production Units 110,000 140,000 140,000

Ending inventory of March = sales of April x 1/2

= 100,000 x 1/2

= 50,000 units

Ending inventory of March will be the beginning inventory of April.

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Thanks

ekkarill92 answered 1 year ago
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